“Help to Buy” includes existing home purchases

Purchasing a home is rewarding, but can have its share of challenges as well, like coming up with mortgage loans.

09:19 26 July 2013

Chancellor George Osborne has clarified that the Help to Buy programme is for first-time home buyers. The programme provides equity loans for the purchase of new homes, and as an extension of the project will soon allow the purchase of existing homes.

The programme will allow people to purchase with just a 5per cent deposit, and the government guarantees a portion of the loan as an incentive to allow banks to lend. You may want to shop for mortgage loans now, but there is a lot to consider first.

• Repayment type—first you should learn the different repayment types that are commonly offered at banking institutions for mortgage loans. There are interest-only repayment plans, with the remaining balance due at the end of the loan, or plans for paying interest and principle.

 

• Proper loan type—depending on what you are trying to accomplish you may not actually want to look at mortgage loans, but rather second mortgages. If you already have a mortgage, you might want to refinance to see if you qualify for better rates. Those types of mortgages are not covered under the Help to Buy programme.

 

• Deposit amount—you tend to get better rates on mortgage loans if you have large amount that you can pay initially towards the loan. This tells the bank you are serious about a purchase, and that you have the ability to manage finances and save a large amount for this type of purchase. You might still be able to get a mortgage loan even if your credit rating is not the best, if you can offer a large lump sum payment.

 

• Competition—don’t forget that banks may desire your business and if you shop around and compare the different rates and repayment plans, you might be able to get better deals on mortgage loans than you originally anticipated.